Problem Statement/Issue(s) Identification: Andrea Tierney opened Aradia fitness London (AFL) in London, Ontario, in 2005. The majority in come of the fitness club is to offering poles dancing class to local London. Tierney wants to lunch a new exercise program TRX which could help decrease attrition rates, and support poles dancing program at the same time. Tierney have a make decision in a very short period of time, which include an appropriate price point and promotion strategy to ensure success of the TRX program. Tiernry’s ultimate goal is to offer both classes as complement to one another.
Recommendation: I recommend Tierney to set the price for TRX program at $159.99 for 6-week program and $29 for teaser class. I also recommend Tierney to choice the promotion strategy to attract current pole dancing students and local university students by offering $129.99 for 6-week program and $19 for teaser class. And focus on local advertising by local radio spots, print advertising, yellow pages listing, and Facebook advertisements.
Rationale/Key Points of Analysis: First of all, price. As Tierney recognized that, initial majority of TXR program students would be who are in the poles dancing class. So, set the price at $129.99 for 6-week program and $19 for teaser class is totally affordable for these students. Local university students would be another group of consumers who willing to have interest in this program. By considering they are sensitive with the price, I would recommend to set lower price for them, which same as current poles dancing students. The price of Competitor’s should be considered in setting price as well. From the case I know that, there are three competitors in London at this time, Athletic club, Good life, and Just sweet. Athletic club does not offer specific long-term training TXR program, although they have two clubs in London. Thus, they are not majority competitor for six-week TXR program in London. Good life does offer six-week TXR program but with $199, which the price I recommend is lower and more attractive for local consumers. Just sweet offers a eight-week program with $360, which is the most expensive one in London. The total cost for TXR program only is $2016 (12*158+120) including HST. Cost will be covered if there are 16 students register for TXR program (16*129.99=2079.87). The life time usage of TXR equipment is unknown, which I assume that it could be 2 years. According to previously analysis, set the price at $129.99 for 6-week program and $19 for teaser class is acceptable and profitable.
Secondly, the choice of advertising. The potential consumers could be roughly grouped as current dancing students, university students, and local residences. Current students and university students are already discussed before, by offering ‘lower price’. The local residences would be promoted though following advertisement strategy: Newstalk as local radio spots; The London Free Press and London Community News as print advertising; yellow pages listing; and Facebook advertisements. AFL is based in London and provide service to local consumers. In this case, national advertising (BX 93 Radio and Virgin Radio) should not be considered. Owner has limited budget and direct mail flyers has limited advertise range which is not befitting for new lunched product. So, direct mail flyers should not be used as well. To conclusion, though providing lower price for current dancing students to register TXR program, and though TXR program increase physical strength for dancing students which could help decrease attrition rates. The plan I recommend could meet Tiernry’s ultimate goal which to offer both classes as complement to one another and ensure the success of lunching new TXR program to the local public.